Health and safety laws rolled out around Australia since 2012 have imposed a new positive duty on company officers to exercise due diligence to ensure their “person conducting a business or undertaking” (PCBU – usually the corporate employer) is compliant.
The term “officer” extends beyond the PCBU’s executives, directors and secretaries to any person who:
- makes, or participates in making, decisions that affect the business of the PCBU; or
- has the capacity to affect significantly the PCBU’s financial standing.
The recent decision of the ACT Industrial Magistrates Court in Mckie v Al-Hasani and Kenoss Contractors Pty Ltd (in liq) is the first to examine the meaning of “officer” under these laws.
In this case, Kenoss Contractors employed Mr Al-Hasani, a well-qualified engineer, to project manage a road resurfacing project in Canberra. A truck hire business was retained to deliver materials to the project site as required and it in turn employed driver Michael Booth.
Mr Al-Hasani gave evidence that he had instructed workers not to use a site at Boldrewood Street in Canberra because it was considered dangerous due to low hanging electrical wires. Nevertheless, that site was left unlocked and had no warning signage indicating the presence of live wires. Despite his allegedly being directed to deliver his load to the main compound, Mr Booth went to the Boldrewood Street compound where the bucket of his truck came into contact with live overhead power lines as it tipped its load, causing his death by electrocution.
Mr Al-Hasani was charged as an officer for failing to exercise due diligence to prevent a workplace death, in particular by not utilising a number of relatively simple and seemingly fairly obvious safety measures, such as not using the Boldrewood Street compound at all, having the power turned off if a delivery was required, and providing appropriate signage as to the risk of the overhead power lines. The charge against him carried a maximum penalty of AU$300,000 or five years’ imprisonment, or both.
In determining whether Mr Al-Hasani was an officer required to exercise the necessary due diligence, the Court considered:
- the extent of his influence over Kenoss (the PCBU) as a whole, rather than just the “role in respect to the particular matter in which it was alleged there was a breach of duty”;
- the tasks he performed, to ascertain whether his participation in the business went beyond the merely operational as far as organisational.
Having considered those factors, the Court was not satisfied that Mr Al-Hasani’s role amounted to “officer level” because his responsibilities were purely operational, in that they related just to the delivery of specific resurfacing contracts and did not include any organisational responsibilities for the broader company. Although he sat close to the top of the business, Kenoss had a relatively flat management structure and there was no evidence that Mr Al-Hasani made or participated in making decisions that affected the whole or any substantial part of it. For example, he was not responsible for hiring or firing employees, he didn’t have authority to commit corporate funds to projects and he couldn’t sign off on tenders.
While Mr Al-Hasani therefore avoided personal liability, Kenoss Contractors was found guilty of a category 2 offence under section 32 of the ACT’s Workplace Health & Safety Act and fined AU$1.1 million, from a maximum AU$1.5 million.